April 15, 2022 (press release) –
TCFD-Aligned Disclosures become Mandatory
As of 6th April 2022, over 1,300 of the largest UK-registered companies and financial institutions will be required to disclose climate-related financial information on a mandatory basis, using guidelines from the Task Force on Climate-related Financial Disclosures.
In 2020, the UK government announced that climate risk reporting would become mandatory for large companies and financial institutions in the UK. Since the law was announced, further details have been disclosed around which businesses this Task Force on Climate-Related Financial Disclosures change will impact.
Energy and Climate Change Minister Greg Hands said: “If the UK is to meet our ambitious net-zero commitments by 2050, we need our thriving financial system, including our largest businesses and investors, to put climate change at the heart of their activities and decision making. By mandating large businesses to disclose their climate risks and opportunities – the first G20 country to do so – we are showing global leadership by making our financial system the greenest in the world.”
What does mandatory climate risk reporting mean for UK organisations?
Following the initial announcement in 2020, it’s now been stated that companies with more than 500 employees and more than £500m annual turnover in the UK are required to disclose potential risks and opportunities associated with climate change.
Climate risk is investment risk. The magnitude of this realisation will be significant for companies as the UK Government commits to adopting, and going beyond, the reporting requirements set out by the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD).
Companies will be required to go through a formal process of identifying and then disclosing details of material risks and opportunities arising from climate change under differing future climate scenarios. Examples of these climate scenarios may include the physical (weather) environment in a ~2°C world vs ~4°C world or the transition (policy) environment in a 1.5°C world.
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